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Saturday, Dec 2, 2023

Countrywide Corp. Employees File Suit

A number of employees participating in Countrywide Financials’s 401 (k) plan filed Tuesday in Santa Ana a class-action lawsuit, alleging that illegal actions by the company caused thousands to lose millions of dollars during the recent stock collapse, according to a news release from the law firm representing the claimants. The suit presented by Seattle-based Hagens Berman Sobol Shapiro alleges that Countrywide CEO Angelo Mozilo certified financial statements he knew were misleading in an attempt to cover the high-risk subprime loans his company was selling. Mozilo misled investors and ignored analysts who warned against the action, the suit contends. The company’s financial woes have “decimated” the 401 (k) savings of employees, said attorney Steve Berman in a news release. Mortgage lenders are struggling in the face of increased defaults and foreclosures in housing, especially in subprime loans. The housing slump has driven some lenders into bankruptcy. On Sept. 7, Countrywide announced plans to cut as many as 12,000 jobs, or about 20 percent of its workforce, over the next three months. The move was to help the largest U.S. home-mortgage lender stay afloat in the face of rising defaults and dropping home prices. CEO Mozilo said in a letter to employees that the situation of home-mortgage loans is “the most severe in the contemporary history of our industry.” Mozilo told CNBC on August 23 that he believes the financial crisis will push the country into a recession. “I don’t see a light here at the moment,” Mozilo said. “Something could happen to change that overnight, but it seems to me we just have a way to go to work our way through this.” Countrywide’s woes in the marketplace were apparent on Wall Street Wednesday when the company’s stock closed at $16.62, down $0.26 cents.

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